How to Spend your Tax Refund

This is the time we all go on holiday with the money from our tax refund. You might also buy the new outfit... or check out that new bike! How do you spend your tax refund?

Reading a lot of articles in the Globe and Mail about taxes (here's one). I am happy to say there are "best practices" when it comes to spending your tax refund.

Here are some suggestions.

Put your tax refund towards your NET WORTH - so that means things that are going to make you richer :)
For example:

You can put it towards any DEBT - the first one is the highest interest paying debt. High interest debt is a killer and is ridiculously expensive. It is the worst way to finance something. If you have no credit card debt, you can put your refund towards your mortgage - this can save you big bucks in interest payments down the line.

You can put it into a RRSPs - Registered Retirement Savings Plan. Now this depends on a number of things, incoming being a big factor, however, it makes sense for many Canadians. Depending on your tax level, next year (2013) you might get another refund!

Contribute to an RESP - if you have children or grandchildren that plan to go to school, the Canadian government gives a 20% grant up to $2500 contributed - which equals $500 a year! DO it!!

Lastly - my favourite little account - a TFSA. You can invest $5,000 per year into a TFSA. There is no tax deductions, however, it does grow tax free :) You can't beat that my friends.